Pandu Sjahrir, Indonesian tech’s power broker, on his next act: energy transition

In a Venn diagram mapping Indonesia’s various centers of power, it’s fair to say that no one occupies a space quite like Pandu Sjahrir.

Initially a coal entrepreneur, the nephew of Indonesian politician Luhut Panjaitan (a close confidant of President Joko “Jokowi” Widodo) entered tech investing after bringing his company public. He ultimately took on roles like chairperson for Indonesia at Sea Group, board member at Gojek, and commissioner at the Indonesia Stock Exchange (IDX).

His work has put him in the same room with the likes of Masayoshi Son, Elon Musk, and – as Sjahrir tells Tech in Asia in an interview – John Kerry, the former US secretary of state and ex-presidential candidate.

But Sjahrir left his position at Sea Group last May. While he’s still at GoTo Financial and IDX, he appears poised for the next phase of his career: working on environmental, social, and governance (ESG) initiatives. Indeed, his seemingly offhand mention of Kerry speaks volumes: the American politician now serves as the special presidential envoy for climate.

At the crux of Sjahrir’s ESG ambitions is Electrum, an electric vehicle company where he serves as CEO. Electrum is a joint venture between GoTo Group and TBS Energi, the energy company that Panjaitan founded in 2007 and Sjahrir took public five years later. Initially focused on coal mining, TBS Energi has since shifted toward clean and renewable energy.

It is a timely pivot considering the world’s focus on climate change. Sjahrir emphasizes that Indonesia, with its vast natural wealth, will be at the forefront of global efforts to tackle the issue.

A big game changer?

There are two intertwined parts to Indonesia’s energy transition potential. The first has to do with rainforests: the world’s third- and fourth-largest, the Australasian and the Sundaland rainforests, are mostly located within Indonesia (51% and 73%, respectively), according to Mongabay.

While Indonesia is a major emitter of greenhouse gases, that may be substantially offset by the sheer size of its rainforests (assuming they are well-managed and protected against deforestation – still a major problem in the country).

Surpluses may then arise should Indonesia reach its carbon emission goals or if there are any efforts (such as reforestation) that can increase carbon absorption. These surpluses can then be sold to other parties (countries, corporations, or even individuals) as a carbon credit. Many countries have pledged to attain carbon neutrality over the next 10 to 50 years, but not all have the resources to offset their emissions domestically.

Key to Sjahrir’s ambitions in the carbon credits space is CarbonX, an impact investment firm focused on sustainability whose strategies include creating a carbon marketplace in Indonesia.

Sjahrir is the president commissioner and a co-founder at CarbonX. The firm’s other co-founders include energy investor Ken Sauer (who serves as managing partner), AC Ventures partner Michael Soerijadji, and Michael Sampoerna, who is a scion of the tobacco billionaire family.

“God has been kind to us – [Indonesia] is the lungs of the Earth,” he explains. “The carbon credit business is a global market, and we’re being discussed as a [top] global producer. We’re not talking about second or third position – we’re talking about number one.”

Sjahrir previously estimated that the carbon market in Indonesia could reach US$300 billion in revenues annually. Meanwhile, three Jakarta-based McKinsey & Company consultants wrote that Indonesia could have over 60 million tons of carbon dioxide equivalents (CO2e) worth of carbon credit surpluses.

The second part of Indonesia’s energy transition potential has to do with electric vehicles. Indonesia is the world’s top producer of nickel – a key ingredient for batteries – producing an estimated 1 million tons in 2021 (about 37% of the global supply for that year).

It is a space that the government has also been vocal about. President Jokowi has publicly appealed to Tesla founder Musk for the firm to manufacture its electric cars – and not just its batteries – in the country. Local users of electric cars also enjoy tax benefits.

“Energy transition could be a ‘big game changer.’”

Companies like South Korea’s LG and Hyundai, as well as Toyota, are also investing in Indonesia’s electric vehicle supply chain ambitions.

Sjahrir says Electrum is TBS Energi’s largest project at the moment and is aiming to tackle one subset of Indonesia’s road vehicles: electric motorcycles.

The motorcycles are not yet available for consumers to purchase, but Gojek has piloted its GoRide Electric service in South Jakarta that uses these e-bikes.

“This is where I’m most passionate,” Sjahrir says. “With GoTo being one of the country’s largest users of motorcycles, why don’t we utilize it? Indonesia can be the world’s largest player in electric two- wheelers.”

Sjahrir’s pivot toward energy transition comes at an interesting time in the Indonesian tech industry. While heavyweights like GoTo and Bukalapak have gone public, questions persist over their paths to profitability and long-term sustainability amid falling share prices.

Considering Indonesia’s innate advantages, energy transition could be a “big game changer,” but Sjahrir still considers tech to be the industry with the highest potential for Indonesia in the next five years.

“What you’ll see in this period is a good reminder that [investors] are underwriting a business. A business has to be sustainable whether you fundraise or not,” he explains. “But what’s most important is that there is real economic value created by these tech platforms.”

In the short term, the journey may be a bumpy road. Sjahrir predicts an upcoming “tough period” marked by headwinds like rising Federal Reserve rates.

“In the long term, I’m not too worried, but in the short term, it’s about how companies can adapt to this new reality,” he says.

In other words, it’s no longer about fundraising faster but asking, “What is my reason for existing in this business and how can I use capital more efficiently?” he adds. “It’s a good conversation. I think the companies that will rise will be much more efficient and I’m optimistic that Indonesia will have new unicorns in 2022 and 2023.”

“Nothing happens overnight”

It is safe to say that a major part of Sjahrir’s role as a “salesperson for Indonesia” – he is often part of delegations that aim to get foreign investor support for the country – comes due to his background, which is an atypical one for an Indonesian.

He was born in Boston, Massachusetts in 1979, a city where both of his parents had studied. (His father, an economist, went to Harvard University, and his anthropologist mother studied at Boston University.)

Sjahrir went on to graduate from Phillips Andover Academy, a prestigious boarding school in Massachusetts whose alumni include the two Bush presidents. He then graduated from the University of Chicago and Stanford University, interspersed with a finance career in New York City (his first job after graduation was an investment banking role at Lehman Brothers).

But he is also quick to point out that his family is not necessarily a wealthy one. His great-uncle, Sutan Sjahrir, was an intellectual and revolutionary who became Indonesia’s first prime minister after its independence.

Meanwhile, his uncle Panjaitan had embarked on a military and political career. Panjaitan was a four-star general in the Indonesian army, and after retiring, he had one-year stints as the Indonesian ambassador to Singapore and the trade and industries minister under President Abdurrahman Wahid.

But Panjaitan did not yet have the clout he would ultimately possess when he called Sjahrir to return home and take charge of TBS Energi (then a nascent company called Toba Bara Sejahtera).

“That was my first challenge,” Sjahrir recalls. “No one else will make you successful – it all depends on yourself. So I wanted to prove to [Panjaitan] and my mother that I could do it.”

He credits much of his success to his “extraordinary” father, who passed away in 2008.

“My father taught me ever since I was little that there will not be any [material] inheritance. He said, ‘I’ll give you the fishing rod, but you have to find the fish yourself,’” Sjahrir says. “When he died, his inheritance was in the form of knowledge and relationships – as a person, he was kind to everyone.”

“We are walking the talk – and that’s what makes us different.”

It was after taking TBS Energi public that Sjahrir went into tech investing, which he continues to do today (now, he works through Indies Capital Partners for private equity and AC Ventures for venture capital).

AC Ventures, which recently reached the first close of its US$250 million fund, has also committed to certain ESG standards. Sjahrir notes that the firm’s overall net impact ratio was 37%. For context, companies in the S&P 500 collectively averaged at 2%. Half of the firm’s senior leadership roles are also occupied by women.

Of course, that doesn’t change how Sjahrir’s background helped him get to where he is today.

“I’m not hypocritical. At the end of the day, I’ve been very lucky,” he says. “I see everything as a blessing. How can I be more useful to as many people as possible? I have an extraordinary father, an uncle who – inshallah – has been very useful for people. I have to be like that too.”

Ultimately, though, Sjahrir’s role as a salesperson is made easier by Indonesia’s own progress. He points out that Indonesia is politically stable, and with GDP per capita growing over twofold in the last 15 years, Sjahrir says it’s not impossible that the number could eventually hit US$8,000.

The next steps, he continues, include developing foreign direct investment to maintain growth, attracting “high-end” human capital – which would provide knowledge and technology transfers – and finally leveling up the skill sets, health, and education of the Indonesian people.

“Nothing happens overnight, so you have to do it step by step,” Sjahrir says. “Indonesia has potential, but our execution continues to improve. We are walking the talk – and that’s what makes us different.”

Sumber: https://www.techinasia.com/pan...

Foto: Pandu Sjahrir / Photo credit: AC Ventures

Penulis: Putra Muskita